What’s an email worth?

Over here at Care2 we get this question a lot. And we should. Any nonprofit seeking to recruit online supporters should rightly be concerned with the ultimate value derived from such supporters. The following is an attempt to address this question, without any presumption that it will provide a definitive answer. Check out the simple calculator below, and if you want more detailed explanation, read the details at the bottom of this blog post, or give us a call. We value the expertise of our colleagues and welcome any feedback or comments.

The Calculator:

To use this calculator simply enter the data from your organization.In selecting the number of addresses you can use a subset, such as all email gathered from a particular source or in a given year, or your entire file. If you are carrying a lot of inactive addresses the average value will of course be lower. The second calculator shows benchmark values from a recent study so that you can compare the performance of your names with those of other organizations working in the same field.

Calculating the average one year value of an email

How do you compare?

Here's a summary of the lifetime value per email from different issue areas, based on a recent benchmark study and assuming the 50% of the emails on each list go inactive each year.

Benchmark average value of an email address

*Source: Convio; The Online Marketing (eCRM) Nonprofit Benchmark Index™ Study January 2007.

Discussion

The first challenge in answering this question is that different organizations use and value online supporters differently. Many nonprofits that have large, active email lists do little or no fundraising from their lists, others use these lists almost exclusively as a source of donations. The same goes for advocacy. In fact, some nonprofits have two completely separate email lists, one for advocacy, and one for fundraising.

A second challenge is that organizations vary greatly in how they measure this value. Some base the value strictly on the donations raised compared to the cost of acquiring an online supporter. Others factor in the value of advocacy, community, mission fulfillment, and branding.

In some respects answering the donor value question by measuring donations is the easiest, or at least most easily quantified, approach. There are many ways of measuring donor value, and here we’ve created a fairly basic calculator that looks at the value of an email address based on average donations over time. From a business perspective any source of email that costs less than the average lifetime value is a good source, from there it’s only a matter of choosing the best source.

The amount of money you are willing to spend to acquire an email address should be determined by the value that your organization will receive from having that email address (and permission from its owner to send messages to him/her, of course). If the main value you are concerned with is donations, then you will want to make sure that the donated dollars you receive from the average email address that you acquired is higher than the average price you paid for these addresses. But don't fall into the trap of counting only the first donation. Instead consider the lifetime value of the email addresses you acquire, because many if not most of your donors are going to keep on donating multiple times.

FAQs

Q: How is drop-off measured?

A: This is the number of emails in your file that go inactive each year, there are diferent ways of determining whether an email is inactive, the most important thing is to be internally consistent in how you measure this. One common measure is if the email hard bounces, unsubscribes, or does not open in 12 months.

Q: Does this include offline giving too?

A: If your organizations uses direct mail, telemarketing, and other methods for asking your online supporters for money this should be included. Organizations that use multiple channels to appeal for support report a higher value and larger gifts from their online supporters.

Q: Does this account for inflation?

A: To accurately assess the value of any activity businesses typically calculate the net present value of the asset. This takes into account all revenue generated by an activity into th future, discounted for inflation. We did not include a discount, or inflation, rate in this calcualtor, mostly for simplicity sake.